Highlights
Strong increase in buy-to-let lending and Idem Capital investment levels. Banking subsidiary established
£269.3 million of buy-to-let loans advanced (2013 H1: £102.3 million); pipeline at 31 March 2014 of £348.1 million; significant increase in lending expected in second half
Idem Capital invested £121.9 million in consumer loan portfolios in the period
Car Finance business launched by Paragon Bank PLC
The business produced underlying profits of £57.9 million for the period, a 20.9% increase, generating a 19.0% increase in EPS and a 25.0% increase in the interim dividend
Underlying profit before tax increased by 20.9% to £57.9 million (2013 H1 (restated*): £47.9 million)
Profit before tax increased by 19.3% to £58.2 million (2013 H1 (restated): £48.8 million)
Total operating income increased by 11.3% to £96.4 million (2013 H1 (restated): £86.6 million)
Earnings per share increased by 19.0% to 15.0p (2013 H1 (restated): 12.6p)
Interim dividend increased by 25.0% to 3.0p per share (2013 H1: 2.4p per share) in line with dividend policy
To enable future growth, funding sources were diversified and expanded on improved terms
Warehouse facilities extended on improved terms and increased after 31 March 2014 from £450.0 million to £550.0 million
Paragon Mortgages (No. 19) PLC securitisation completed, with a broader investor base and on improved terms, funding new buy-to-let loan assets and refinancing a legacy deal, First Flexible No. 4 PLC, the first since 2007
First structured funding of acquired Idem Capital assets completed
Second issue under retail bond programme
Banking licence granted to Paragon Bank PLC, retail deposit taking capability established
Commenting on the results, Nigel Terrington, Chief Executive of Paragon, said:
"Paragon has continued to make excellent progress during the first half of the financial year. The successful launch of Paragon Bank and its initial range of car finance and deposit products marks a milestone in the on-going diversification of the Group's income streams and funding sources.
The Group has added extensively to its funding capacity with larger warehouse facilities, a second retail bond, dedicated structured funding lines for Idem Capital and another highly successful securitisation transaction. This highlights how well the Group has positioned itself to support further growth opportunities in the future.
Meanwhile our core buy-to-let lending business has advanced strongly and our significant pipeline of new business and the strength in the UK housing market are positive drivers for continued growth. Whilst the buy-to-let market has expanded well in recent years, it remains materially below its pre-financial crisis peak, again highlighting additional growth opportunities in the future.
Our debt purchase business, Idem Capital, has invested a further £121.9 million in the first six months of the year and we see a strong pipeline of acquisition opportunities ahead. Idem Capital is now firmly established as one of the leading players in the UK's debt purchase market.
With these three business lines, the Group remains well positioned for further growth in the second half of the year and opens a new phase in the Group's expansion as a specialist lender."
